The Day Before It Went On Sale

A reader bought a yearlong subscription to Rift for $120 the day before it went on sale for $108.

Now, I know it’s only a matter of $12, but that’s not what irked me.

I am curious to hear your particular take on whether or not a company should offer this type of incentive before or after a large portion of their player base has to choose to re-sub or not.

Obviously, I am biased because I re-subbed regardless of the price…but it doesn’t make me feel very special (customer from day one, etc, etc) that I had to pay more.

The economic term we want here is price discrimination. That is probably a prejudicial term in modern American parlance, since “discrimination” has strong negative connotations beyond the simple denotation of being able to tell things apart. And as demonstrated, those in the (even slightly) more expensive market segment will tend to have negative feelings about this price discrimination. Did I tell you about the time that I bought an item on a good Steam sale the week before a GREAT Steam sale, or when I picked up Anivia in LoL two weeks before a permanent 50% price drop?

Barring extreme outliers, no, you do not think price discrimination is immoral, nor do you think it should be illegal. Otherwise, you would already have complained about coupons, which are a form of price discrimination. People who with relatively high values of time to money clip coupons, while those with time as a limiting factor are less likely. You are familiar with “time vs. money” debates in gaming. You would also have protested whenever games become cheaper over time. I bought Borderlands for $50, with all the launch bugs, while you get it patched and with all the DLC for $7.50, while they’ll charge me $7.50 just to add the DLC? Well, yes, I got the game a year earlier or so, and here is a different form of time-money trade-off.

There are shadier and more difficult ways of engaging in price discrimination, but “over time” is the most consistent one in gaming sales. Start at $50-60, sell as many as you can. Wait. -$10, sell as many as you can. Wait. Repeat. If StarCraft 2 is worth $60 to you, you can buy it anywhere at any time. If it is worth $40 to you, you will be waiting to find a good sale like I did. If all three versions of it together are worth $40 to you, you will be waiting to get a boxed set in 2016. Everyone can pay what they like, which is good for the company and lets everyone have it. Eventually.

The downside for the company is that you cannot plausibly keep doing it without affecting sales. If no one anticipates the sale, it will have no negative effect on your full-price sales and is pure, successful price discrimination when you sell to lower-value customers. Next round, they will anticipate the sale, and that will reduce your initial sales. This is generally a problem with sales: you offer a discount to people who would have paid full price. (Reference also the problem in government: subsidize X and you are mostly giving away money to people who already X rather than drawing in new X.) Price discrimination-over-time also gets around much of this because the people who will pay full price want it right now. They might buy the collector’s edition!

On one hand, if you were willing to pay $A for the game, you lose nothing when the next guy gets it for $A*0.9. But you are a primate, so you feel opportunity costs, you feel cheated, you want yours. That’s okay. We’re all mammals here. It’s a problem we’re all dealing with. Our brains are built to handle this kind of thing.

Logically, you know there must be some sort of cut-off where the price changes. If the company says, “And we’re giving you back 10% if you bought it the day before the sale,” the people who bought it two days ago will now feel worse. (And the company profits nothing for rewarding that past behavior in a way that does not incentivize future behavior, unless this makes people more likely to buy their games in advance of sales.) Every exception just creates a new line.

The hard part is ignoring sales on things you already own. “Hey, that is a GREAT deal on that pack … except that I already own all but 2 of the games in it that I want.” Other option: GIFT PACKS! Here, let me buy ANOTHER friend Plants Vs. Zombies. Because that’s a really great game.

: Zubon

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11 thoughts on “The Day Before It Went On Sale”

Stuff goes on sale. Always has, always will. Sure there have been times when I bought something and then soon afterwards it went on sale cheaper. But there have also been times when I meant to buy something, didn’t get around to it, and then it went on sale, netting me a bargain that I would have missed out on if I’d been more energetic.

Well, there’s one other option, one that brick-and-mortar stores have been using for years. Have your sales, mark down your prices, but announce it all well in advance.

On the negative side, once you announce the price will drop in two weeks, you get almost no sales for two weeks.

On the positive side, once your customers know that you always announce your price drops two weeks in advance, high value customers are less likely to wait.

Let’s say StarCraft II is worth $60 dollars to me, and it’s currently $60 dollars, but could drop at any moment. That silhouette of a sale waiting in the wings gives me reason to hold off on my purchase until I absolutely have to play it. But what if that wasn’t the case? What if I knew from past experience that Blizzard always announces their sales on Monday, at least a week in advance? Well, if Monday rolled around with no announcement from Blizzard, then I’d know the current price tag wasn’t going anywhere for at least two weeks, and I’d feel safer buying it right now at $60. And then, even if the announcement came the Monday after I bought it, I wouldn’t feel too bad: I’d have the game in my hands, and I’d have at least a week to practice before a fresh wave of noobs arrive on Battle.net.

Creative marketers could mitigate the sales dry spell — “What’s that? It’s going on sale two weeks after Christmas?” — or even turn it into a sort of benefit — “Hey, we need to do some maintenance on the billing servers. Is there a week we can shut them down without losing too many customers?”

On the other hand… there’s a reason I never chose Business as my major in college.

I really don’t care. I’m not a particularly price-sensitive consumer. Because I read a lot of gaming blogs I’m quite often made aware of various “sales” and “offers”, be it through Steam or direct from game producers. I have yet to buy a single item because of a special offer or sale.

I buy the items or services I want at the time I want them for the price they cost. If I don’t want something, I don’t want it even if it’s free. If I do want it, I’ll pay what it costs, provided I consider that cost commensurate with the use I expect to get from it. Having bought something it’s entirely immaterial to me whether the purchase price then goes up or down for other purchasers. Why should I care?

My interest is in products and services being priced appropriately in the first place. There is, of course, a relationship between perceived value and actual cost, but for me it isn’t a sliding scale. Something that I considered not worth buying at $50 would not become worth buying at $25 unless I had already decided that the product was double the price it should have been. That hardly ever happens: most products are launched at something close to the price I think they are worth, so it becomes a simple matter of “Do I want it?” and “Can I afford it?”

I love a bargain, but a bargain is only something you would have bought at full price that you are lucky enough to get at less than full price. Something you get at less than full price, which you would not have bought at full price, is not a bargain. It’s just an item you have found at the correct price, which was previously overpriced.

Hence, if a 12-month sub to Rift was worth $120 to me today, it is still worth $120 to me tomorrow, notwithstanding any price change that might have occurred overnight. And Rift is well worth a $10 a month sub.

Economically speaking, one makes the most profit by indeed waiting until all those willing to pay the higher price have paid, before ratcheting down the price a notch.

I don’t really have an issue with “over time” price discrimination. The ability to wait for a discount versus playing it now has a direct correlation with the perceived worth of a game to a player. I’m fully intending to wait till 2016 for the Starcraft 2 Battlechest, fer example, and I often wait for Steam sales that slash 50% or more, ignoring the 25-33% ones. But there have been a few recent games that I was desperate to play the week of release, or wanted a pre-order shiny, and coughed up the initial high sum regardless.

I take a long time deciding the price I’m willing to buy a game at, and only buy when I’m fully convinced it’s worth getting -now- over waiting later. If the price drops further, it ceases to bother me because I’ve already paid what I was willing to pay for it. Hell, sometimes the discounts are so good, you feel like buying the thing a second time. The recent Steam indie tower defence bundle was one of those… Such great games, all of which I already had. Whoops.

My pet peeve is regional price discrimination. I can only thank the gods I don’t live in Australia, it’s the worse example I’ve ever encountered. 90 buck games. No wonder people pirate those.

I’m with @Jabberwockist – in brick-and-mortar stores, it’s not uncommon to bring your receipt within one month of a purchase when something is on sale, and get refunded the difference.

To prevent people from NOT buying during that 2-4 week interval, though – why not just do a search on all people who have bought through your online presence / registered their game with you and give them a $(price difference) gift card / coupon / what-have-you? That way people will be more likely to purchase without thinking “what if it goes on sale in a month?” since they know that there’s *something* that will go to them if they make a “mistake”